A Project Has an Initial Investment of $150

question 38

Multiple Choice

A project has an initial investment of $150. You have come up with the following estimates of revenues and costs. Calculate the NPV assuming that cash flow and perpetuities. (No taxes.) (Cost of capital = 10%)

• A) 50, -100, +400
• B) -50, +300, +500
• C) -100, +150, +350
• D) None of the above

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Definitions:

Purchases Returns and Allowances

Transactions where a buyer returns goods to the supplier or receives a reduction in the purchase price, reducing the amount owed to the supplier.

Merchandise Inventory

The goods a company holds for the purpose of selling to customers.

Periodic Inventory System

A method of tracking inventory where physical counts are conducted at certain intervals to determine the level of inventory and the cost of goods sold.

Cost of Sale

The direct costs attributed to the production of the goods sold by a company.